Public Affairs Networking
27/03 – Hopes buoyed that eurozone recovery is gaining momentum
Hopes that the eurozone recovery is gathering pace have been buoyed by accelerating growth in France and Spain,The Times reports. Spain’s central bank raised its 2015 forecast yesterday – by 0.8% to 2.8%, as El Mundo reports – while France’s Finance Minister claimed that the country’s GDP would beat the government’s projections for the current year – Mr Sapin now expects a deficit of 3.8% (instead of the 4.1% in previous projections) for 2015. “The happy surprise of the 2014 public deficit,” reads a headline from Le Monde, as the French public deficit amounted to 4% in 2014, according to figures published yesterday by the French National Institute of Statistics (INSEE), as French and German media report.
That is €8 billion less than the 4.4% deficit projected in the amended finance bill. This is good news for the government, which must present its budgetary stability and national reform programs to the EC in April, notes Le Monde. For Mr Sapin, the results are “obviously a selling point for 2015, 2016 and 2017,” allowing Paris to ask Brussels not to be “outrageously and unnecessarily demanding” with measures that could hinder growth. The question is whether the EC will agree, Le Monde comments.
Les Echos is more critical, stressing that France remains among the EU’s worst pupils. The French deficit, the newspaper says, remains well above the European average, and France will be the only euro area country, apart from Spain and Portugal, to have a deficit above 3% this year. In Italy, ECB President Draghi’s speech to the national parliament garners much media attention – not only in Italy but also elsewhere.
Several factors, Mr Draghi noted, increase confidence that recovery will become stronger, and that inflation will return to its target level. The ECB’s monetary policy is supporting the economic cycle, Mr Draghi further said, as reported by Corriere della Sera. Citing the Bank of Italy’s forecasts of 1% extra growth thanks to QE, Mr Draghi claimed that QE is already working, and that the impulse from monetary policy will lead to more credit in the real economy.
However, the overall effects of QE could be greater, he claimed. Experts quoted by The Wall Street Journal Europe say that lending data released by the ECB on Thursday also suggest that the ECB’s stimulus measures are starting to bear fruit, pointing to continued improvement in the eurozone economy. Lending to firms and households indeed rose on the month in February, with loans to corporates rising by €8 billion and loans to households by €1 billion.
Amid these renewed hopes the eurozone recovery is gathering pace, EC sources in Brussels appear realistically optimistic that Greece will submit the package of structural reforms on time, Naftemporiki reports. “Negotiations with the Eurogroup should be finalised early next week with the release of funds and the end of our liquidity problems,” said Greek Economy Minister George Stathakis on Thursday morning, reports L’Opinion. In an op-ed in El Economista, Greece’s Finance Minister Varoufakis calls on European leaders to work together to redesign the monetary union so that it supports shared prosperity, rather than fueling mutual resentment.L’Echo and Tageblatt also publish Mr Varoufakis’s article.
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